Court records, driving history, and ensuring an applicant is not on a watch list or sex offender registry are undoubtedly valuable components of a background investigation. But some believe that interviewing people to learn about an applicant’s general reputation, personal characteristics, etc., is also important. After all, a person may have a clean background check but be considered by former colleagues as hard to get along with, lazy or abusive.
What employers don’t realize is that those interviews can expose them to liability if the proper procedures are not followed.
The issue hinges on one simple question: whether the background check is part of a consumer report or an investigative consumer report.
The names are similar. But there are some key differences. Here’s how they vary.
- Consumer Report. This information comes from a consumer reporting agency (CRA), which provides information on a consumer’s creditworthiness, character, general reputation, criminal history, etc.
- Investigative Consumer Report. This report also includes personal interviews with neighbors, friends, colleagues, etc., to obtain information about an individual’s character, reputation and honesty. Receiving unsolicited information may also make the report an investigative consumer report.
From an employer’s viewpoint, a consumer report has minimal liability. The information obtained is typically verifiable and comes from reputable sources. But when a background check becomes an investigative consumer report, the potential for legal issues can arise.
Employer Obligations
Many of the regulations that govern employment background checks are part of the Fair Credit Reporting Act (FCRA). The FCRA prescribes certain additional duties to employers when obtaining investigative consumer reports, such as:
- Securing written authorization from the applicant for an investigative consumer report.
- Clearly disclosing that information may be obtained about his or her character, general reputation, personal characteristics, etc.
- Including a statement that the applicant may request additional disclosures concerning the specifics of the inquiries.
- Providing the applicant with a summary of his or her rights with the above disclosure.
- Certifying to the CRA that these disclosures have been made to the consumer and that they will comply with the disclosure requirements regarding the nature and scope of the investigation.
The FCRA also governs how information, especially derogatory information, must be independently verified before being reported, or must come from the best possible source. In addition, any information that is a matter of public record needs to be verified.
For example, a former colleague says, “I heard he was convicted and fired for embezzlement.” The statement may be true. Someone directly involved with, or knowledgeable about, the reason for termination would have to provide confirmation. Additionally, court records would need to confirm the conviction, which may or may not be reportable, depending upon applicable laws.
Potential Liabilities
In addition to being potentially liable to applicants, employers can also be sued for negligently failing to comply with the statute. Employers can be liable for:
- Actual damages
- Costs
- Attorneys’ fees
Plus, the employer’s reputation is at stake. The negative publicity can do more harm than the lawsuit itself.
The Value of Digging Deeper
Time and again, the human element of background checks has proven critical to uncovering information that may be undetectable in a standard background check report. Lack of criminal records, a clean driving history, and an immaculate credit report are excellent facts to know. However, these assets don’t reveal how a person gets along with others or whether he or she has bad office etiquette.
For many roles, the information available through public records may be sufficient; however, some positions require more detail, which can only be obtained by contacting former/current colleagues, neighbors, etc. Securing this additional insight could lead to the employment of a star performer who looks average on paper—or avoid the addition of someone who looks fantastic but can’t get along with peers.
Make an Informed Decision
Before doing a background check, make sure you understand what information you’re seeking and how you plan to verify and use it. A professional investigation firm can help you understand the process and avoid unnecessary liability.
In addition, because a background check that includes interviews can significantly increase the turnaround time, make sure to allow enough time in the process for thorough, professional, verified results.
